New York Appellate Court Affirms Denial of Discovery Into Other Hurricane Sandy Claims

In Knickerbocker Village Inc. v. Lexington Insurance Co., New York's Appellate Division, First Judicial Department, dictated a clear rule for single-insured cases regarding the discovery of an insurer's treatment of insurance claims brought by other similarly situated insureds: that information is not "material and necessary" and thus not discoverable under section 3101 of the New York Civil Practice Law and Rules.

This case arose out of a disagreement between Lexington Insurance Co. and Knickerbocker Village Inc. over the applicability of the "named storm" deductible in Lexington's commercial property insurance policies issued to Knickerbocker regarding a Hurricane Sandy loss. Knickerbocker requested information about Lexington's treatment of Hurricane Sandy claims brought by other similarly situated insureds whose policies included a "named storm" deductible provision as well as deposition testimony regarding the handling of other similar policies by a nonparty witness in connection with his underwriting work at his current employer, which was not Lexington.

The lower court denied Knickbocker's request to compel such discovery, and Knickerbocker appealed. Knickerbocker argued that this discovery was relevant to both the credibility of Lexington's witnesses and to the issue of whether Hurricane Sandy constituted a named storm. Lexington argued, among other things, that the information was irrelevant in that the language from its policies, not language from policies issued by other carriers, was controlling. Lexington further cited a well-established case law that denied the discovery of underwriting information related to the policy in dispute, let alone other policies not at issue.

In an unexpansive decision, the court affirmed the Supreme Court's order, which denied Knickerbocker's requests, finding the information was not "material and necessary" to the prosecution of the claims in the action.